Sydney purchases a newly issued, two-year government bond with a principal amount of $10,000 and a coupon rate of 6% paid annually. One year before the bonds matures (and after receiving the coupon payment for the first year), Sydney sells the bond in the bond market. What price (rounded to the nearest dollar) will Sydney receive for his bond if newly issued one-year government bonds are paying a 5% coupon rate?
A. $10,600
B. $10,000
C. $9,906
D. $10,095
Answer: D
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Suppose the government of New Country has fixed the value of its currency, the New Peso, at $1 per New Peso, but the market equilibrium value of the New Peso is $2 per New Peso. In order to maintain the official value of the New Peso the Central Bank of New Country must either ________ domestic interest rates, or ________the supply of international reserves by purchasing New Pesos
A. lower; decrease B. lower; increase C. raise; decrease D. raise; increase
Barriers to entry can be the result of
a. Positive network externalities b. High switching costs c. Economies of scale d. All of the above
Suppose Botswana doubles its income in 6 years while South Africa doubles its income in 9 years. According to the rule of 72, the growth rate in Botswana is:
A. 3 percentage points higher than the growth rate in South Africa. B. 4 percentage points higher than the growth rate in South Africa. C. 12 percentage points higher than the growth rate in South Africa. D. 8 percentage points higher than the growth rate in South Africa.
A firm in a perfectly competitive market:
a. ?can decrease its supply to increase the market price. b. ?can increase its supply to lower the market price. c. ?has to accept the market price for its product. d. ?has to lower the price of its product to sell more output. e. ?can raise the price of its product and sell more output.